After eight days, diesel price hiked again; petrol remains unchanged

New Delhi: Fuel prices again started moving north after a pause for eight days, as oil companies on Tuesday raised pump price of diesel by 25 paise that pushed up its price in Delhi to a record Rs 80.78 per litre.

The retail price of petrol, however, remained unchanged for the eighth day on Tuesday at Rs 80.43 per litre, according to state-run Indian Oil Corporation (IOC).

Retail prices of auto fuels differ from city to city across the country due to variations in local levies.

Pump prices of auto fuels that witnessed a rising streak since June 7 saw 12.86% and 16.41% jump in the rate of petrol and diesel, respectively.

In comparison, the international benchmark, Brent crude, rose by 1.89% in the last one month.

During the intraday trade on Tuesday, Brent was trading at $42.81 per barrel, or about 1.3% lower than the previous day’s close weighed down by a stronger dollar and oversupply concerns.

A petroleum ministry spokesperson said, “The diesel and petrol prices in the country are linked to the international prices of finished products, and not crude prices.”

However, he could not immediately provide the percentage changes in global benchmarks of petrol and diesel in the one-month period between June 7 and July 7.

An executive of state-run oil marketing firm said, requesting anonymity, that companies do not disclose data related to the price movement of petrol and diesel benchmarks as a matter of commercial secret.

Theoretically, the government has no role in the daily revision of petrol and diesel prices, as these are deregulated products. The government had deregulated petrol pricing in 2010 and diesel in 2014.

State-run fuel retailers – Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) – declined comments.

The three public sector oil companies control over 90% of domestic fuel retail trade.

The oil company executive mentioned above said petrol and diesel rates are also high because of a significant jump in central levies that mop up the entire price benefits when international crude oil prices were low.

In the last one month, petrol and diesel rates have seen 21 and 23 revisions, respectively.

Prior to the start of a daily price surge, petrol was sold at Rs 71.26 per litre in Delhi and diesel at Rs 69.39 a litre on June 6.

Two people with direct knowledge of fuel pricing matters, requesting anonymity, said that the price rise in the last month also gave an opportunity to state-run oil marketing companies to recover their past losses, as they had frozen fuel rates to provide relief to consumers, who had been distressed by the coronavirus disease (Covid-19) pandemic.

Fuel retailers had frozen petrol and diesel rates since March 16.

However, retail prices were raised on May 5 because the Delhi government had raised the value-added tax (VAT).

Almost all states have raised VAT on petrol and diesel since mid-March to take advantage of low oil prices in the global markets.

One of the persons working in the petroleum ministry said all past dues of oil marketing companies have been already been recovered and the current fuel price hike is purely aligned with international prices of petrol and diesel.

Diesel prices in Delhi have surpassed petrol because the state government raised VAT on diesel sharply. Even otherwise, internationally, diesel rates are higher than petrol, the person said.

The Union government raised excise duties on petrol and diesel twice – first on March 14 by Rs 3 per litre each, and later on May 5 by Rs 10 a litre on petrol and Rs 13 on diesel. A Re 1 per litre hike in excise duty meant an additional Rs 14,500 crore revenue to the exchequer.

Consumers could not reap the benefit of the recent oil price slump because both the Centre and states have cornered the entire benefits through higher levies in the forms of central excise and VAT.